Nickfromwales Posted October 15, 2018 Share Posted October 15, 2018 Anyone care to have a stab at what ‘the future’ holds for oil prices ? As I come across more and more instances where folk wish to move away from burning fossil fuel, I am being asked for cost comparisons / RoI etc and I really am not sure about 10 and 20 year forecasting, so thought I’d put it out there. It will also make some interesting reading and hopefully fortify members and guests decision making when considering capital expenditures vs lifetime ownership of such fossil fuel based systems. I suppose adding gas into the scenario would likewise be of benefit. TIA. Link to comment Share on other sites More sharing options...
Dreadnaught Posted October 15, 2018 Share Posted October 15, 2018 (edited) Oil is a widely traded commodity. Theory states that the price in open markets with huge turnover encompasses all information, both about the present but also future trends too. There are, of course, professional traders of oil. In the wider market, the prices of oil futures contracts represent real monetary bets on the future oil price (for hedging purposes and speculation). They are the best indication of what that group thinks about the trend in future oil prices but they are quite short term. In reality, with such a widely-traded commodity, anything longer is really just guesswork. (In anyone on this board thinks otherwise, they would do well to keep quiet and financially trade on their knowledge instead ?). The gas price is closely correlated to that of oil, as are a range of other oil-related products such as industrial plastics. Don't fall into the simplistic trap of thinking that oil is inevitably a dwindling resource and so its price must inevitably rise in time. Things are more complex than that. For example, a rising price leads to more oil exploration. A case in point is the rise of fracking in the US. Even people within the industry didn't predict it. This is shown neatly by the newly constructed and hugely expensive gas-liquefaction plants at US ports that were completed just before the fracking boom. They were were designed to import Qatari liquified gas by ship. With the advent of US fracking they were expensively all flipped around ready to export gas rather than import it. Nobody guessed it. For your purposes, I imagine that your best bet is to use the current oil price in your estimates, with scenarios for swings not only up but down too. Edited October 15, 2018 by Dreadnaught 1 1 Link to comment Share on other sites More sharing options...
newhome Posted October 15, 2018 Share Posted October 15, 2018 As above but in brief heating oil prices tend to mirror crude oil prices in general and if you could predict that accurately you may be able to retire ? Link to comment Share on other sites More sharing options...
pulhamdown Posted October 15, 2018 Share Posted October 15, 2018 OK. So what about a slightly different slant on the question. What would be a good susbstitute for an oil fired boiler where mains gas is not available. This would be for a well insulated house, with UFH, no radiators, and a 3.7kw solar set up. Are we at the stage where Sun Amp could replace an oil fired boiler, perhaps with an ASHP? Link to comment Share on other sites More sharing options...
Jeremy Harris Posted October 15, 2018 Share Posted October 15, 2018 This falls well and truly into the "too hard to estimate" category, I think. This graph shows the crude oil price between 1946 and 2018, and illustrates just how much variation there has been: You could draw a pretty crude line through that to show the mean, then extrapolate it out to 2038, but I'm not sure it would tell you much, given the very wide fluctuations in price. Link to comment Share on other sites More sharing options...
joe90 Posted October 15, 2018 Share Posted October 15, 2018 And if we fall out with the Saudi,s ?. 1 Link to comment Share on other sites More sharing options...
ProDave Posted October 15, 2018 Share Posted October 15, 2018 1 hour ago, pulhamdown said: OK. So what about a slightly different slant on the question. What would be a good susbstitute for an oil fired boiler where mains gas is not available. This would be for a well insulated house, with UFH, no radiators, and a 3.7kw solar set up. Are we at the stage where Sun Amp could replace an oil fired boiler, perhaps with an ASHP? The No 1 thing has to be insulate as much as possible to reduce heating load. I chose an ASHP for my heating. I did not want oil again and be subject to hugely varying and unpredictable prices. You can see from the graph above, filling my oil tank in 2005, or even 2006/7 at twice the cost of when the system was installed in 2003 was painful. Electricity by comparison has slowly increased, but not with the huge volatility that oil has. And if you install solar PV so at least some of your consumption can be self generated, that has to be a sound proposition. 1 Link to comment Share on other sites More sharing options...
Stones Posted October 15, 2018 Share Posted October 15, 2018 I was reading an article earlier today suggesting the oil price could rise to $400+ a barrel if sanctions are imposed on Saudi Arabia and they choose to retaliate. Not convinced by that, but you could imagine a scenario where they choke off a % of supply to shock the price up. Link to comment Share on other sites More sharing options...
A_L Posted October 15, 2018 Share Posted October 15, 2018 O.K., my tuppence worth. Over any five year period oil will only rise at a little more than inflation. Why? Renewables/CO2 Emissions restrictions/EVs will reduce demand and limit price rises. This will leave oil for what it should always have been reserved for, a chemical feedstock (utterly invaluable source of molecules)/lubrication/fertiliser? Link to comment Share on other sites More sharing options...
PeterW Posted October 15, 2018 Share Posted October 15, 2018 Oil has fallen over the past 3 years but over 7 years has stayed at a median price. It’s use is diminishing so it’s not hit with the volatility or general growth that vehicle fuels are hit with and also not subject to the increasing taxes. The issue with wind and solar is they cannot guarantee the base load so we need either fossil or nuclear to maintain this and the cost is in this element predominantly for the energy markets. Wind and solar pretty much have a high £/MW install but a near zero ongoing cost in relation to the traditional generators. Link to comment Share on other sites More sharing options...
epsilonGreedy Posted October 15, 2018 Share Posted October 15, 2018 The fracking boom in the US was funded by cheap investment money and repayment will be a problem for many frackers so best not assume future cycles of fracking exploration. That said science plus economic incentive have delivered remarkable advances in fuel economy so I reckon from a global perspective the oil price will remain sane and stable when measured against a basket of global currencies. The more pertinent concern is what price a barrel in pound notes? On this point I am not optimistic. We are just a nation of vulgar obese indebted alcoholics not fit for purpose, eventually we will be rumbled and relegated to second world status at which point the pound will tank. Link to comment Share on other sites More sharing options...
jack Posted October 15, 2018 Share Posted October 15, 2018 24 minutes ago, epsilonGreedy said: The fracking boom in the US was funded by cheap investment money and repayment will be a problem for many frackers so best not assume future cycles of fracking exploration. Exactly this. Link to comment Share on other sites More sharing options...
Jeremy Harris Posted October 15, 2018 Share Posted October 15, 2018 27 minutes ago, epsilonGreedy said: We are just a nation of vulgar obese indebted alcoholics not fit for purpose, eventually we will be rumbled and relegated to second world status at which point the pound will tank. As a non-alcoholic, median weight, UK (and Irish) citizen, with no debts and only a modicum of vulgarity (and normally only when provoked) I'd question the accuracy of this overly harsh generalisation of the general population and the members of this forum... 1 Link to comment Share on other sites More sharing options...
epsilonGreedy Posted October 15, 2018 Share Posted October 15, 2018 2 minutes ago, JSHarris said: As a non-alcoholic, median weight, UK (and Irish) citizen, with no debts and only a modicum of vulgarity (and normally only when provoked) I'd question the accuracy of this overly harsh generalisation of the general population and the members of this forum... The future economic vitality of the UK and hence the oil price denominated in Sterling will be determined by 60 million Brits not 100 lean clean living enterprising BuildHub members. My assessment of the UK population is highly accurate: Any health economist will confirm the UK is going through one of its periods of national alcoholism and the consequences are being seen by NHS docs. There have been other similar periods in British history. Latest stats provide a glimmer of hope and indicate young people are looking at the all the middle aged alcoholics in this society and rejecting the alcohol based culture of their parents and grand parents. The UK is one of the most obese nations in the world, it is a national health scandal which will inevitably hurt national economic performance. Foreigners are shocked by the degrees of everyday vulgarity in the UK today. We have lived through a media-driven period of competitive vulgarity embraced by celebs. We are certainly an indebted nation, Sovereign debt has reached 1945 levels then layer on student debt and other debt lurking as loans held by Government agencies such as the NHS. The elephant in the room is unfunded liabilities. This year Government bean counters revised unfunded liabilities up by 30% of annual Government spending in a single accounting correction. Anyone in the UK trying to assess the price of oil over the next 20 years should consider both global price trends plus the likely purchasing power of the £ in that period. 1 Link to comment Share on other sites More sharing options...
Jeremy Harris Posted October 15, 2018 Share Posted October 15, 2018 Might be worth looking at underlying facts: Alcohol related deaths have increased over the past 20 years, but still only account for 0.0117% of total UK annual mortality (source: the ONS). Obesity related mortality data for the UK isn't easy to interpret from the available reliable data sources, but that for Europe as a whole may be indicative, and that suggests that around 14% of the European population are at risk from increased mortality as a consequence of obesity. That needs to be put into context, so it's worth noting that 18% of the population of the USA will die as a consequence of obesity. Vulgarity is in the view of the beholder and very dependent on location. I'd say there are countries within Europe where vulgarity is far more prevalent than the UK. Off the top of my head, how about the French habit of urinating in public and defecating by the side of roads? The national debt needs to be put into perspective with other countries in Europe. Greece, Italy, Portugal, Belgium, Spain, Cyprus, and the Euro area all have a greater national debt level than the UK (Source: https://www.statista.com/statistics/269684/national-debt-in-eu-countries-in-relation-to-gross-domestic-product-gdp/ ) 1 Link to comment Share on other sites More sharing options...
PeterW Posted October 15, 2018 Share Posted October 15, 2018 One of the best long term studies on obesity is from The Lancet and it uses a massive data set that shows that global obesity is on the rise. In 2017, the U.K. didn’t even make the top 30 countries by population percentage and there is significant growth in middle and far eastern countries as diets change. Full report is here Link to comment Share on other sites More sharing options...
Hecateh Posted October 15, 2018 Share Posted October 15, 2018 2 hours ago, epsilonGreedy said: We are just a nation of vulgar obese indebted alcoholics not fit for purpose, eventually we will be rumbled and relegated to second world status at which point the pound will tank. Is that a mirror you're looking at? 1 4 Link to comment Share on other sites More sharing options...
Alexphd1 Posted October 15, 2018 Share Posted October 15, 2018 vulgar obese indebted alcoholics ........ bit harsh?? Link to comment Share on other sites More sharing options...
Barney12 Posted October 15, 2018 Share Posted October 15, 2018 3 hours ago, epsilonGreedy said: We are just a nation of vulgar obese indebted alcoholics not fit for purpose, eventually we will be rumbled and relegated to second world status at which point the pound will tank. Is that the royal we? 1 Link to comment Share on other sites More sharing options...
Barney12 Posted October 15, 2018 Share Posted October 15, 2018 Getting back to @Nickfromwales question. Taking a slightly different tack...... im always quite interested in this “what’s the next 20 years” type question. Are there any stats that show how long the average self builder stays in the house they’ve built? If the answer is (say) 10 years then the original question becomes a little achedemic? Or at least half as important!! 1 1 Link to comment Share on other sites More sharing options...
Nickfromwales Posted October 16, 2018 Author Share Posted October 16, 2018 11 hours ago, Barney12 said: Getting back to @Nickfromwales question. Taking a slightly different tack...... im always quite interested in this “what’s the next 20 years” type question. Are there any stats that show how long the average self builder stays in the house they’ve built? If the answer is (say) 10 years then the original question becomes a little achedemic? Or at least half as important!! TBH if somebody comes to me wanting to install £40k worth of renewables ( retro fit ) then I ask them if they really want to do that as they're never going to see the payback. Great for some who say its for their childrens' children, and also great for the few who actually instruct me to do as they wish regardless of RoI etc, something that happens more frequent that you'd think. The '20 year question' has a point, as in its the reasonable time to expect to see RoI and to actually see the financial ( removing morals for the moment ) benefits of pursuing such endeavours. One chap rang the other day asking about SA / PV / etc and how to rid himself of his oil combi. After finding out he wanted to move in 10 years or less to his 'forever home' I told him to change to a condensing combi, improve the insulation if possible, and maybe fit PV but only if he wanted to. I have to show due diligence so cannot be an eco-warrior with other peoples money, so my perspective may not be aligned with most on this forum, or anywhere else for that matter, but id still like to focus on that term, eg 20 years. Another question is would folk be better off changing to all electric ? eg switching from oil to an electric boiler ( high temp for radiators in most instances of retro fit ) and fortifying with PV ? Too multi-faceted to ask here, unless anyones bored, but the core question remains, regarding fuel costs for the next 2 decades so I can reinforce my case when clients come knocking for 'renewable solutions'. Im off to McDonalds now, and then to the off-license, and then to the betting shop with my Giro. Must be back home by 11 for the back-to-back episodes of Jeremy Kyle. Not. 3 Link to comment Share on other sites More sharing options...
epsilonGreedy Posted October 16, 2018 Share Posted October 16, 2018 3 minutes ago, Nickfromwales said: I have to show due diligence so cannot be an eco-warrior with other peoples money, so my perspective may not be aligned with most on this forum, or anywhere else for that matter, but id still like to focus on that term, eg 20 years. Such due diligence is commendable but are you subject to mis selling regulations like an independent financial adviser? Link to comment Share on other sites More sharing options...
Dreadnaught Posted October 16, 2018 Share Posted October 16, 2018 (edited) @Nickfromwales, concerning a 20-year horizon, I would consider that to be substantially in the realm of politics, not economics. Edited October 16, 2018 by Dreadnaught Link to comment Share on other sites More sharing options...
bassanclan Posted October 16, 2018 Share Posted October 16, 2018 For a high oil user he could hedge against rising oil costs by buying an oil derivatives or more simplistically oil shares. I'm just installing a wood burner with back boiler to reduce oil use, which in a rural area with access to "free" wood makes sense. Link to comment Share on other sites More sharing options...
Nickfromwales Posted October 16, 2018 Author Share Posted October 16, 2018 Just now, epsilonGreedy said: Such due diligence is commendable but are you subject to mis selling regulations like an independent financial adviser? I guess anybody and everybody who enters into a written or verbal agreement aka contract is. https://www.thecomplainingcow.co.uk/how-to-use-the-misrepresentation-act-1967/ Just a random 'net grab. Link to comment Share on other sites More sharing options...
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